Nifty Metal forms Death Cross;  prepare for more pain ahead!

Nifty Metal forms Death Cross; prepare for more pain ahead! – Mail Bonus

It has turned around in terms of metal parts. After a great performance last year, the metal counters are melting significantly, so much so that the BSE index formed a death cross on Tuesday.

The index reached its lowest 52-week low of 16,901.9, after a sharp 29 percent correction in two months from a 52-week high of 23,742.99.

It has turned around in terms of metal parts. After a great performance last year, the metal counters are melting significantly, so much so that the BSE index formed a death cross on Tuesday.



The index reached its lowest 52-week low of 16,901.9, after a sharp 29 percent correction in two months from a 52-week high of 23,742.99.

The death cross is a map pattern that indicates the transition to the bear’s grip. This technical indicator occurs when the short-term moving average (eg 50 days) of stocks / sectors exceeds and falls below the long-term average (eg 200 days).

The formation of Death Cross indicates more pain ahead for investors.

The majority of stocks of metal, iron, steel or related sectors are in tight bear hold. Data from Ace Equity indicates that more than 100 stocks from the metal and related sectors have fallen by more than 20 percent since the last peak. More than 20 names have fallen between 50-65 percent.

Among the wealthy,

Metals, Nova Iron, & Power, Product and India Steel Works lead with over 60 percent fall from the tops.

Famous names, including National Steel, Jindal Stainless,

(Hisar), (SAIL) and & Iron Ores and have reduced more than half of investors’ assets.

ETMarkets.com

Table-2 (3).ETMarkets.com



Other big names, (48 percent down), (47 percent down), Jindal Saw (44 percent down), KOICL (42 percent down), (41 percent down) and NMDC (40 percent down) are key asset destroyers.


Table 3ETMarkets.com

Table-4ETMarkets.com



Bluechip company

& Power, Tata Steel, Vedanta and JSW Steel have also fallen by 30-45 percent from a 52-week high.


Table 5ETMarkets.com

Market analysts do not see any improvement in these measures in the near future, thanks to the restrictions and limitations caused by the Covid-19 fears in China – the largest consumer of metal in the world. At the same time, the price of iron ore in India is likely to remain unrelated to the price at sea due to the export tax of 15 percent imposed by the government on iron ore and pellets, experts said.

China’s steel load is still muted, which should support steel prices and limit highs from current levels. However, China’s steel needs are the key to a revival, Equirius Wealth said.

“Rising coal prices – triggered by the war between Russia and Ukraine and weather-related disruptions in Australia – are now complete, probably faster than expected. Asymmetric steel companies in India have emerged as the lowest cost producers in the world.”

The decline in coke demand in recent weeks can be attributed to the return of coke supply from Russia and weaker global demand.

Nomura believes that demand for coke in India weakened in May and is likely to remain weak at 1HFY23. This, it said, puts pressure on profitability compared to the beginning of the monsoon.

“Demand for coal from Australia is likely to remain weak, even as steel production from China continues to grow as Chinese factories supply coal from Russia at lower prices, as opposed to Australian coal,” she added.

The main economic indicators in China are still significantly weak, Nomura said. “In the first week of June, merchants’ steel stocks increased due to weak demand due to holidays and weather conditions.

Equirius Wealth said it remained positive towards non-integrated steel players, with Jindal Steel & Power as the best choice. NMDC is our best-selling iron ore figure as the company is likely to be most affected by falling ore prices in India, it added.

Nomura also has a “Lower” rating on JSW Steel with a Rs 500 mark, but Sharekhan has suggested keeping SAIL with a Rs 80 mark. Sharekhan also has a buy rating for

with a target price of 1,740 Rs.

“We keep our choice of non-ferrous tables with Hindalco (target price: Rs 555), Vedanta (target price: 414) and GMDC (target price: Rs 230) as our key choices,” said Edelweiss Securities.

(Disclaimer: Recommendations, suggestions, opinions and opinions given by experts are their own. This does not represent the views of the Economic Times)

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